10 February 2012 11:14 AM

Stop debating the numbers and focus on getting small businesses the capital they, and the country, need

Business groups, the Government, the banks and the bankers’ representative body, the British Bankers Association, are at odds over whether small businesses are getting access to the funds they need to finance their businesses.Small businesses cite the cost of borrowing is still too high to make the investments they need to grow and create new jobs.Eighty nine per cent of businesses consider the arrangement fees on loans to be too high, up 9 per cent from 82 per cent last year.Other findings include that 34 per cent of businesses are delaying investment in their business due to difficulties in obtaining finance.The reason is that funding for small and medium-sized enterprises is likely to be particularly difficult to obtain as banks seek to reduce credit risk.The Government states that its initiative, ‘Project Merlin’ which was set up to encourage banks to lend more, is hitting the targets but is falling short of hitting the spirit of it and doing little to alleviate tight lending conditions on firms. The average interest rate on smaller loans, of £1m or less, is already double that charged on loans of £20m or more, with this trend expected to continue.What is worrying that the banks blamed "wider macroeconomic concerns" which had "led to a reduction in business confidence". They add that where there is demand, it is typically limited to working capital requirements rather than investment. The banks have to make commercial decisions based on the viability of a business. The economic outlook is still uncertain. The banks are not charities but businesses themselves. The Government still has a long way to go to convince the banks that the economy is in recovery.

According to a recent survey of members of the Federation of Small Business 33 per cent of their members who requested a loan were turned down, and 21 per cent of those who did get a loan had to pay interest rates of 10 per cent or higher. The Institute of Directors reported a similar survey. The British Bankers’ Association refuted the findings saying that the sample survey was a small and un-representative sample. This morning I did a quick ready-loan-online application with a major bank asking for a small business loan for £25,000 over various repayment periods and the rate was set at 10%.However, the problem isn’t just the banks, it is high taxation which needs to be much lower, the burden of employers’ NI rates and the red tape and bureaucracy from the EU. If this was stripped from businesses as we were promised by this Government then more businesses wouldn’t be borrowing to finance their existence but investing and creating jobs.

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JANICE ATKINSON-SMALL

Janice is a director of a new, centre-right think tank, WomenOn ... which seeks to challenge the left dominated Guardianista feminist view of the world of women which does not represent ordinary women. Women On … researches the issues facing women today, and promotes ideas and policies which enable all women to reach their full potential – economically, socially, culturally and politically, but not at the expense of men.
In politics she was the director of Conservative Action for Electoral Reform (but did not support AV) and had provided communications for MPs, MEPs and campaign groups. She stood for the Conservative Party in the 2010 General Election in Batley and Spen but is now a member of UKIP.
Prior to becoming involved in politics, Janice ran her own successful marketing communications business. She is divorced with two teenage sons and is about to re-marry.
www.womenon.org